Sunday, July 24, 2016

CIOs as Talent Master: How to Measure Human Capital Effectively

You should always leverage performance and potential, look at the overall success of the company for the long run.

People are always the most invaluable asset to the organization but often turn to be the weakest link in strategy execution. Unlike the other tangible value of business assets which are more easily measured in a quantitative way. The true value of people, especially today’s high professional knowledge workforces include many tangible and intangible factors because people are not just the cost or the resource to be managed, but the capital to be invested in and their potential if unleashed can bring the quantum leap in the business growth. So what are the premium approach and methodology to measure human asset & capital? What KPIs would you recommend to determine the value an employee adds to their department and ultimately to their organization, and how would you implement it?
The true value of an employee would rather be measured by his or her quality, creativity, capability, and productivity: To measure the true value just by counting all the cost, the company has paid to the employee would be ineffective.There is a big difference between cost and quality. The true value of an employee is demonstrated when the employee acts as an ambassador, innovator or customer champion of the organization; brings the advanced mindset, knowledge, skills, abilities and creativity that translates into expected performance outcomes; has the capacity to be resilient towards change and acts as a change agent; possesses a capacity to attract and retain quality talent. There is an impact to the bottom line due to inspiration and culture addition. When there is a negative culture in a company, efficiency and productivity decrease, employee engagement decreases causing mediocre work, and creativity and productivity are compromised. The intangibles affect the bottom line beyond productivity to objectives.
Building a clear link between people value and business value: There are two aspects of strengthening the links between individual performance and business performance: first what the individual adds to the department, and second what the department adds to the business. Taking the second one, you will be aware of the various measures of reliability, availability, utilization and the turnaround KPIs. At an individual level, it might come down to the annual assessment of how he or she did against the objectives that were set. Measuring or improving effectiveness and delivering value from resources is more about having the visibility and insight into the non-productive time (NPT) and focusing on reducing that. Resources waiting on materials, permits, tools, availability are not effective and to improve management behaviors needs to be proactive rather than reactive.
An employee's "book value" can be viewed as a function of what investments have been made in them and how they bring high-than expectation value: A valuable employee is a self-leader who makes a positive impact on business culture; stays current in their profession; freely innovates, creates new efficient ways of working; mentors and coaches others. And the company gives him or her some responsibilities and how well an employee could perform to deliver these responsibilities, even beyond expectation, would be the true value of the employee. Often times, employees are the innovators in an organization. They bring about cost saving improvements that might be overlooked. Talent Management needs to logistically place a book value to these scenarios in order to explain the importance of an intangible to business executives.
All organizations face a challenge to evaluate the value of employees in an objective and effective way. Each evaluation will obviously vary in outcomes and results as each workplace and position within varies. When you look at the true value of an employee, you are looking at the return on the investment that you have made, not only the short-term quantitative result, but also overall business competency. You should always leverage performance and potential, look at the overall success of the company for the long run.


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